[뉴욕=뉴스핌] Correspondent Hwang Sook-hye = As the yield of U.S. Treasury bonds, centered on long-term products, surged, it once again caused a wave of waves in the financial market as a whole.
As the Fed took an unprecedented move to tolerate inflation overshooting at a monetary policy meeting on the 16th-17th, Wall Street betting on long-term Treasury bond yields and yield curve stiffening slumped.
Contrary to Wall Street’s old adage not to fight the central bank, the so-called “chicken game” rose once more between the Fed, which maintains zero interest rates, and Wall Street, which did not trust it and weighed on rising interest rate bets.
In September of last year, the so-called average price target system was introduced, and the intention to endure inflation exceeding the target for a considerable period of time was announced, and the overshooting was officially tolerated at this month’s meeting with specific forecasts. Is the appearance.
Market experts voiced a voice that policymakers were releasing the barrier to rising market interest rates, while some raised concerns about policy failures.
It is pointed out that the possibility that the Fed is taking too easy a stance on overshooting inflation and growth rates, and the possibility of a situation that cannot be controlled due to the missed timing of appropriate response cannot be excluded.
In addition, it was argued that 2021 should be prepared for a decline in long-term investment returns along with the diagnosis that 2021 is a turning point for inflation.
At the beginning of the market on the 18th (local time), the US 10-year Treasury bond yield jumped more than 10bp (1bp = 0.01% point) to 1.75%, reaching a 14-month high.
The yield on 30-year Treasury bonds has risen above the 2.5% line for the first time since 2019, and for this reason, the spread compared to 5-year bonds jumped to the highest level in 7 years.
In the latter half of the market, the Nasdaq index fell by about 2.4%, stumbled by the impact of the market interest rate hike once again, and the S&P 500 index, which is composed of large stocks, also fell by 1.0%.
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| Traders on the floor of the New York Stock Exchange [사진=로이터 뉴스핌] |
The previous day, the Fed presented its US economic growth rate and personal consumption expenditure (PCE) inflation forecasts of 6.5% and 2.4%, respectively, and announced that it will maintain a zero interest rate policy until the end of 2023. ) The industry is a move to actively respond.
While barclays’ sale of treasury bonds is spreading to short-term, with Barclays going to’sell’ for 3-year treasury bonds, Morgan Stanley tells customers that expectations of an interest rate hike could impact the asset market, centering on bonds, regardless of the Fed’s decision Warned that there is.
In the report, ING said, “The yield of 10-year Treasury bonds will lead to an unbreakable rise in the next few weeks,” and argued that the yield curve will also show uncontrollable stiffening due to the Fed’s decision on this policy.
The investment banking (IB) industry is pouring out the prospect of an increase in market interest rates, with the Australian New Zealand Banking Group suggesting that the US 10-year Treasury bond yield will rise to 2.0% sooner or later.
In an interview with Bloomberg, TD Securities’ strategist Generdy Goldberg predicted, “As the Fed tolerates inflation overshooting, inflationary bets will bog down, while market interest rates and yield curves will draw an upward curve.”
There is no skepticism about the possibility of rising inflation based on the $1.9 trillion super stimulus package and the Corona 19 vaccine, but the opinion that a surge in inflation is an extremely realistic risk is increasingly weighed on.
Deutsche Bank warned that inflation is likely to jump faster than expected and more than expected, in which case the 10-year Treasury bond yield would soar to 3.0%.
Just a day after the Fed laid out its monetary policy stance, concerns over policy failure also raised their heads.
Federated Hermes economist Silvia Dalangelo said, “The steep tremendous jump in Treasury yields on this day is a cross-section of concerns among investors that the Fed is taking an overly relaxed attitude towards the risk of overheating the economy and inflation. As investors in Korea continue to respond aggressively, volatility in the bond market is expected to be high for the time being.”
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| Wall Street sign in front of New York Stock Exchange [사진=로이터 뉴스핌] |
Allianz Bernstein said in the report, “The Fed has been open to the possibility of an economic rebound this year, but it overlooked the possibility of a prolonged growth rate and inflation cycle, and it made a difference with investors.”
Bank of America (BofA) published its report and predicted that 2021 will be a’turning point’ to awakening inflation, which has been sleeping for a long time, as the Fed’s policy stance changes.
It is time to actively prepare for a situation in which the long-term return on stock investments declines as inflation rises in earnest.
However, some are predicting a scenario in which the adage of seeing frustration in fighting the central bank is realized. CNBC Mad Money host Jim Kramer argued that Wall Street’s betting on the possibility of the Fed raising its benchmark interest rate before the end of 2023 would eventually lose.